Nonferrous metals exploration spending rebounded rapidly in 2010 after a disastrous 2009. Industry suppliers also responded with a wave of new products for higher drilling productivity and improved data handling and analysis.

By Russell A. Carter, Managing Editor

Apart from its intrinsic economic importance, the mineral exploration sector also can serve as a convenient wide-angle lens with which to view the commercial landscape surrounding its parent enterprise—mining. Shifts in exploration spending, geographic focus and commodity targets generally can be linked with corresponding changes in mining company financial health, market trends and investor confidence, among others. Looking at last year’s exploration spending figures, and estimates for this year’s activity levels, the data displays a bright economic image backlit by the glow of continued high metals prices.

Global Exploration: Rapid RecoveryAbout this time last year, E&MJ reported that Metals Economics Group, a Halifax, Nova Scotia-based firm which tracks exploration statistics worldwide, estimated that planned nonferrous exploration budgets of the 1,846 companies reporting in its annual survey of corporate exploration strategies totaled $7.32 billion for 2009—down from a record $12.6 billion in 2008, marking the largest one-year decline in the past two decades. The most recent MEG report, issued in conjunction with this year’s Prospectors & Developers Conference, held March 6–9 in Toronto, Ontario, notes most mining companies raised their exploration budgets in 2010, resulting in a 45% increase in estimated worldwide nonferrous metals exploration spending compared with 2009.

MEG’s PDAC report, taken from the most recent edition of its ongoing Corporate Exploration Strategies studies, pegged 2010’s nonferrous exploration budget at more than $11.2 billion—restoring almost two-thirds of the $5.5 billion that was cut from exploration in 2009.

MEG’s 2010 estimate includes uranium exploration budgets totaling almost $830 million, which when added to the $11.2 billion nonferrous total along with MEG estimates for non-reporting companies, drives 2010 planned exploration spending to an estimated $12.1 billion-plus. Including uranium, the number of companies covered by the study increased to more than 2,200.

The speed and the strength of the 2010 rebound were a welcome surprise to many, given the severity of the downturn and widespread forecasts of a deep and protracted recession. Among those most surprised were some of the larger exploration drilling services companies, who saw their business volume explode to pre-recession levels.

MEG noted that, in cutting their 2009 exploration budgets, many companies also reduced both the number of projects they were actively exploring and their drilling plans in order to cut costs and conserve cash for high-priority assets. Given the sharp rebound in 2010, most companies with comparable figures planned significantly more drilling—a 48% increase in the aggregate planned drilling by a group of juniors with comparable data, a 20% aggregate increase among majors, and a 14% increase by intermediate companies.

Quick Recovery Mirrors the SlumpNew Brunswick, Canada-based Major Drilling Group International, for example, has experienced a rapid ramp-up of demand for its drilling services this year—the mirror image of a collapse in late 2008, its chief executive recently told a Reuters reporter at the news service’s Global Mining and Steel Summit.

“We lost 65% of our business in 90 days and it looks like it’s all coming back in 90 days,” said Major Drilling CEO Francis McGuire. “It’s an explosion of juniors. It’s not stopping,” he said, adding majors and exploration companies were also vying for the company’s services.

The company has grown since the early 1980s into the world’s second-largest provider of drilling services to miners, behind Salt Lake City, Utah-based Boart Longyear, which reported 2010 revenues of $1.08 billion from its Global Drilling Services division—a 47% increase from 2009.

McGuire said Major Drilling could easily have a much larger number of rigs, but it lacked the crews to operate them. “It takes three to five years to train a driller,” McGuire told Reuters. “We’re just not going to be able to ramp up the number of drillers to meet demand.”

The company sees prices for drilling services rising this year as utilization rates increase. He said the full benefit of this would not be reflected until 2012, as half of its rigs had been contracted before the demand surge began early this year. “This is going to be, [over] the next six months, a very difficult ramp-up period,” McGuire said. “Before you get the full impact of pricing, it will be 2012.”

McGuire also said the company’s margins were being pressured, as it had been forced to increase wages faster than normal in an effort to retain talent. But margins will begin to expand as the company pushes through price increases when it signs new contracts with miners later this year. He added the company would look at contracting out some of its rigs on a day-rate basis as utilization rates creep higher.

McGuire noted the industry moves fairly cautiously while pushing through price increases to miners. “There’s an expectation that pricing’s going to hit our financials right away,” McGuire said. “But that 30% we lost on pricing [in 2008] usually takes three years to get back, so that will give you an idea.”

Juniors Contract, Majors ExpandHowever, despite the strong recovery in exploration budgets and planned drill programs, MEG’s statistics indicate the aggregate number of projects being explored by junior companies dropped 10% in 2010 after falling 20% in 2009, while majors and intermediates reported declines of 6% and 16%, respectively. In step with these trends, the total amount of ground held for exploration by comparable juniors declined 6% in 2010 (on top of a 45% cut in 2009), compared with a one-third increase in the area held for exploration by majors (following their own 45% drop in 2009). Intermediate companies maintained their land holdings at about the same level year on year. The data, according to MEG, suggest many juniors are focusing considerably more drilling on relatively few high-priority projects, while the one-third increase in area held for exploration by the majors suggests at least some may have taken advantage of the 2009 dip in exploration activity to expand their exploration footprint, either through staking or acquisitions.

MEG’s survey results show that late-stage spending has outweighed grassroots spending for the past six years. Grassroots’ percentage of budgets has generally declined since the mid-1990s, and dropped an average of 2.5% annually from a recent high of 52% in 2001 to a record low of about 33% in 2009 and 2010. This decline correlates with an upward trend in late-stage budgets, as companies spend more on late-stage projects to move them towards production or make them attractive for acquisition. Similarly, mine-site exploration spending increased in recent years because producers view it as a cheaper and less risky means of replacing and adding to reserves.

MEG reported Latin America, led by Mexico, Peru, Chile, Brazil and Argentina, was the top regional exploration destination in 2010—a position it has held for the better part of two decades—while Canada was the top country overall. Gold was the leading target, attracting more than half the global exploration budget total, with copper a distant second.

Doing Data BetterThis year’s PDAC show also served as a platform for introduction of a number of exploration-related products. Gemcom Software International unveiled Gemcom Hub, which it describes as an innovative data management solution optimized specifically for exploration and production data. According to Gemcom, Hub enables the rapid and reliable transmission of large data files—including geological models, drillhole data, schedules and surveys—using the Internet over even intermittent, low-bandwidth connections common to remote mine sites. It is claimed to integrate seamlessly with existing stored data generated from most industry-standard exploration, mine planning, and production software, and also manages file output from common office applications used by staff.

Kevin Ward, Gemcom’s product manager for Hub, said, “Electronic data transfer is not a new practice in the industry. The transfer of exploration and production data, however, often running to multiple gigabytes in size, is an industry-specific challenge because local Internet connectivity is often slow and unreliable. When seeking to collaborate, it’s not uncommon for files to be loaded onto a CD to be carried by staff or couriered to and from locations across the mining enterprise. Using Hub, staff can travel less and actually spend more time working with their colleagues on projects. Ultimately, this increases productivity and saves costs.”

One of the key considerations Gemcom used in designing Hub is that a consistent and uniform data set is needed to support effective decision-making throughout the enterprise. According to a white paper explaining Hub’s features, different groups throughout an enterprise should not be able to change data independently; but an effective method for “data locking” will enable different team members to manage their shared data while they are disconnected from the central data management system. Data locking prevents people from making simultaneous revisions to the same file, a situation that can result in changes being lost or misinterpreted.

Hub addresses this issue by locking files while they are being worked on, preventing separate sets of changes from occurring at the same time. Until a new version is approved and released, other users can continue work based on the previously released version. Once changes have been finalized, the files are synchronized with the master version. With Hub, said Gemcom, even when a file is locked the previously released data can still be used for reference. In addition, users can see when files of interest are updated, and the latest official version of the data is always in the central repository. Hub’s version control, according to Gemcom, also enables users to roll back to earlier versions—even to deleted files.

Meanwhile, Inmarsat, a supplier of global satellite communications services, announced the availability of a data service on its newest global handheld satellite phone, the IsatPhone Pro. The new circuit-switched data capability, offering an effective data rate of up to 20 kbps, was scheduled to become effective in the next firmware upgrade to the handset in late March 2011.

“IsatPhone Pro is ideally suited for use as a data service,” said Drew Brandy, director of land services at Inmarsat. “The handset design means the IsatPhone Pro can be simply placed on its side with the antenna deployed for connection to the satellite while a micro USB cable connects it to a laptop. And the Inmarsat-4 satellites on which the service runs are designed specifically to handle data communications.

“We are very pleased with the performance of IsatPhone Pro’s data capability. It is proving to be very robust whether using generic or customized applications. In testing we have actually exceeded 20 kbps throughput with plain-text e-mail on several occasions. It’s ideal for those wanting to access e-mails, jpegs, documents or PDFs,” he said.

In addition to the data capability, the next firmware upgrade for IsatPhone Pro was slated to feature a number of service enhancements.

An ITH SolutionAfter introducing its new line of Excore diamond core bits at last year’s PDAC, Atlas Copco Geotechnical Drilling and Exploration revisited the Excore line at PDAC 2011 to unveil its Excore Solution Premium ITH tools. The latest Excore product lineup now includes a newly configured head assembly adaptable to both surface and underground drilling orientations; an improved overshot assembly; the MO-EX thread, designed to increase productivity and cut back on downtime; two new rod types—MO and CMO—for both straight and deviated hole drilling applications; and a complete line of drill bits.

Excore high performance head assemblies are now available in DCMA sizes B,N and H for both surface and pump-in applications. The new head assemblies, according to Atlas Copco, offer secure latching, as the mechanical piston that locks the core barrel head in the locking coupling is strong enough to secure the inner tube within the locking coupling even in high-back-pressure boreholes. Along with a primary landing indication, a secondary indicator also lets the driller know if the latches are not fully engaged—signaling that there is a problem in the core barrel and that further actions are needed. The new head assembly is designed to reduce inventory with its ability to convert from a surface system to a pump-in system for drillers working in both surface and underground operations.

Atlas Copco also introduced the Excore Auto Safe EX overshot, featuring an automatic safety mechanism that does not require direct action by the drilling crew to engage. This eliminates the possibility of a crew forgetting to engage the safety mechanism; and in addition, while pulling the inner tube they do not need to stop the process to retrieve the core. As an additional innovation, Atlas Copco said it also adapted the geometry of the lifting dogs to further improve safety by significantly increasing the contact surface between the spear head and the lifting dogs.

Rolling Ahead to Higher ReliabilityBoart Longyear unveiled seven new products at PDAC, ranging from the RC6 reverse-circulation multipurpose drill rig to its own new Roller Latch head assembly, a new line of Ultramatrix core bits, two new lines of drill-and-blast rods, and two new safety tooling innovations.

The company designed the RC6 as a lightweight and compact RC rig that also offers versatile coring, down-the-hole-hammer (DTH) and rotary drilling capabilities (check this issue’s Equipment Gallery section for complete details).

Boart’s new head assembly features patent-pending Roller Latch technology it claims allows for greater pump-in speed and productivity, with a design incorporating large ball bearings for latching and hold-back braking to retain inner-tube assemblies in the drill string for safer operations.

Roller Latches deploy and retract radially, without swinging like conventional pinned latch mechanisms, and fit tightly onto the outer tube, eliminating excessive wear on the couplings, landing shoulder and landing ring. Also, conventional latch mechanisms can be difficult to retract against a jamming ‘core block,’ where Roller Latches will simply drop back in upon wireline retraction.

Matt Baird, product manager for Boart Longyear, said, “Traditional pinned latching mechanisms wear fast. Since the Roller Latch rolls, rather than drags onto the rod string, product life is increased and the load capacity is equal to or better than our ‘link latch’ mechanism.”

The new Roller Latch locking coupling connects the drill string directly to the outer tube, locking the latches and rotating the head assembly with the rod string, which eliminates the need for an adapter coupling, drive key or tang feature. Locking couplings for the Roller Latch head assembly are available in both full-hole or stabilized carbide style.

The Roller Latch head assembly also features new variable lip pump-in seals that are compatible with Boart Longyear’s V-Wall drill rod, providing the advantages of the lightweight V-Wall rods for underground coring applications for the first time.

The new Ultramatrix diamond bits feature advanced metallurgical formulas and Boart Longyear’s Razorcut face design. Ultramatrix technology impregnates large synthetic diamonds within a proprietary metallurgical formula, creating a crown matrix that is said to be optimized for longer bit life and increased penetration capabilities. The Razorcut face design is ready-to-cut right out of the box and improves tracking and balance in the hole. The new bits also feature the advanced Stage waterway design, which allows crown heights up to 25 mm, thus increasing productivity and extending bit life. The bit line’s Twin-Taper windows are designed to improve surface flushing, forcing debris through the windows while keeping the bit face clear and reinforcing the inner-diameter. According to the company, window distribution and shape have been designed for optimum performance in all ground conditions.

The company also displayed two new rod handling tools intended to reduce common injuries incurred by drill crew members. The Rod Lifter is a handheld device that has been ergonomically designed to eliminate strain and protect fingers from pinch points and sharp surfaces. The Rod Lifter also prevents thread damage and eliminates pipe slippage, with a specially designed carbide rod grip. The new Split Tube Loader tool is designed to eliminate hand contact with sharp, jagged edges that are often present on drill casing tubes. Designed to fit multiple split tube diameters, the Split Tube Loader fits in the hand and keeps fingers away from dangerous contact points.

Enter the Hero 11Canadian drilling equipment supplier Fordia introduced a new diamond core bit to its Hero series of matrices. Consistent with the rest of the series, the Hero 11 comes with a 13-mm diamond impregnation height. The three core bits that now comprise the product line cover ground types with hardness ranging from 3.5 to 7.5 on the Mohs scale. According to Fordia, the Hero 11 bit is designed with an extremely sharp matrix to operate in very hard to extremely hard ground types, such as those consisting of basalt, felsic or volcanic rock that are often encountered in South America and Australia.

DMT’s Exploration and Survey division displayed the new CoreScan3, representing what it described as a new generation of drill-core scanners. Supplied in combination with dedicated analytical software, this new technology, said DMT, was developed in response to customer requests for mobile, high-quality geological drill core evaluation.

The new model is a mobile, stand-alone unit that has two operating modes: It can acquire images of full-circumference or slabbed core with a resolution of up to 40 pixel/mm (1,000 dpi) or record complete core boxes in a single image. The scanning software makes it possible to correlate individual images with the corresponding depths and to show them in proper orientation.

The CoreScan3’s data acquisition process is controlled by new software that has been optimized to increase scanning speed, thus increasing productivity as the time needed for handling the drill core is reduced to a minimum. CoreBase2, DMT’s analytical software, generates a database into which additional data—thin sections, chemical analyses or core sampling logs—can be imported, stored and graphically depicted together with the scans. The evaluation of geological structures such as strata, cleavages and foliation is effected with integrated pick-up routines. In addition, geomechanical parameters such as RQD can be determined and displayed.

A supplementary software program, CoreImageAnalysis, also makes it possible to conduct sedimentological and mineralogical studies with automated support. Mineral grains are identified and quantified on the basis of color differences. Grain-size analyses and statistical studies of mineral grain distribution are now within the CoreScan3’s capabilities.

The CoreScan3 measures 1.36 m long x 0.75 m deep and stands 1.28 m high; it weights 128 kg and operates on 110–250 VAC, 50Hz/60Hz power sources. It can handle core lengths up to 1 m and core diameters of 25–150 mm (unrolled core), up to 250 mm (slabbed).

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